AS GRADUATE entrants prepare for their first weeks in the City, some might wonder whether they’ve signed up for a job or a profession. We assume that law and medicine are professions – life-long career choices with strict knowledge requirements, and professional bodies sitting in judgement over the actions of their members. Wrongly, we don’t always make the same assumption about financial careers.
A job managing investments on behalf of millions requires as much professionalism as a career carrying out open-heart surgery. Many financial workers will have undertaken, or will be considering undertaking, a qualification to demonstrate their skills to clients and employers. They’ll likely be keen to broaden their knowledge of the industry. And, in a hugely competitive jobs market, no doubt they’ll be searching for ways of distinguishing themselves from rivals.
But help is at hand. There are ways of providing evidence of your professional worth without relying on the strength of your name, your employer, or recommendations from clients or colleagues. Professional bodies – the Institute of Chartered Accountants in England and Wales (ICAEW) for accountants, the Chartered Insurance Institute (CII) for insurers, or the Chartered Financial Analyst (CFA) Institute for investment professionals – can all help provide that credibility.
As Gavin Aspden, director of qualifications at the ICAEW says, “professional qualifications give confidence to those who are using the services of the professional.” But before jumping at the opportunity, it’s important to understand what these qualifications involve, and the burden they place upon you.
A SOLID EDUCATION
The CFA Institute is one professional body among many. But, according to a survey by FundFire earlier this year, its credential – the CFA charter – was viewed by wealth management professionals as the most respected in the investment industry. This month, another survey by the same publication found that the charter is increasingly seen as a necessary precondition for success in the investment sector.
The CFA Institute describes its charter as a “globally recognised, graduate-level investment credential”. At its heart is a core educational curriculum, which Ed Bace, head of education for Europe, Middle East and Africa at the CFA Institute, describes as “broad-based in terms of its subject matter.” It’s intentionally general in its coverage – from knowledge of specific asset classes to various tools for analysing investments -- and is geared towards those who are “interested in learning more about the institutions in which they work.”
This focus on the breadth of investment is critical to its appeal. Mark Tapley was formerly chief investment officer at West LB Asset Management. He undertook the CFA when working as a trainee at JP Morgan in the 1970s and still credits its impact on his professional development. “After completing such a generalist course, when someone from a specialist silo – an economist or an accountant, for example – walks into a room, it gives you enormous confidence because you’ve enough background to follow what they’re saving, and you’re able to challenge them,” he says.
The programme isn’t a broad curriculum studied briefly, however. It’s famously difficult and involves 300 hours of study each year for three years.
Difficulty insinuates professional benefits of its own. Abraham Harris, analyst in global talent management at BlackRock, argues that the challenge “really appeals to people.” There is a feed-through effect, Harris says. The perception that someone has worked hard to attain a difficult credential creates confidence among colleagues and clients. “It’s a sign of hard work. CFA charterholders are people who’re willing to work long hours. Anyone who is in the process of attaining the charter has demonstrated that they’re committed.”
The investment profession, however, rarely stands still. What may have been acceptable behaviour or standard practice one year could be obsolete a decade later. As such, professional status requires continuing self-education.
Bace highlights some recent changes to the CFA programme. “One trend is that we’re trying to make it more global.” The CFA Institute originally focused near-exclusively on US investment professionals, but its evolution into a global body has necessitated, for example, “more emphasis on international reporting standards.” Similarly, he says, “obtaining the CFA charter is a life-long learning process. Charterholders must stay abreast of developments. We have a recommended minimum of 20 hours continuous learning every year.”
To some extent, involvement with the networks of societies that spring up alongside the professional body can make this easier. And membership also holds benefits of its own. The CFA Society of the UK is the membership body both for those who hold the CFA charter and those who have its entry-level equivalent, the Investment Management Certificate. Its chief executive, Will Goodhart, believes “that membership demonstrates a commitment to the profession. It tells employers and clients that an individual is interested in maintaining a high level of professional standards.”
Active engagement is the ideal. “If you’re a member of the Society, if you’re receiving our publication, if you’re meeting other members, you’re more likely to talk about important issues in the sector, how they can be best addressed, and how standards can be maintained, than if you simply come into work and get on with what you regard as your job.”
You could, however, see a similar boon from belonging to the alumnus network of a business school after taking an MBA. Why, then, do professional bodies like the CFA hold an advantage? Critically, it’s because they regulate the professional behaviour of their members.
Harris calls the CFA the “gold standard” for investment professionals as much because of its rigorous ethical requirements as its educational standards. Especially in front office roles, investment practitioners get better results from their clients “when it’s recognised that you have the right knowledge and experience.” The CFA programme is also a close fit with BlackRock’s own ethical principles. “They’re absolutely hand in glove.”
According to Bace, the strict ethical standards imposed upon CFA charterholders mean that “a client or colleague can have more confidence in the ethical behaviour of the individual who is managing their money. And it’s more than a perception. It’s a reality because our members have been very clean, despite all the financial scandals that have erupted recently.”
Tom Forrest, director of financial services at the recruiter Ranstad Financial and Professional believes this ethical aspect has become more important in recruiting since the credit crunch. “Clients want credibility. Employers want to hire people who have a good understanding of the risks and regulations. They want employees who care about investment and understand how important professionalism and ethics are.”
Being professional or ethical is more than just adhering to nice sounding platitudes. It can have a concrete effect on how a future, or current, employer will perceive your commitments to the industry in which you’re working.
The financial system, and the world economy, has profoundly changed since the introduction of the CFA in the 1960s. The increasingly global character of the investment profession, and the progressively rigorous requirements imposed upon its professionals make it an upward battle to prove sufficient knowledge, ethical conduct, and expertise to thrive in today’s business environment.
Professional accreditation, like the CFA charter, can make a difference in differentiating yourself professionally from your peers.